Path: utzoo!mnetor!lsuc!dave
From: dave@lsuc.uucp (David Sherman)
Newsgroups: can.general
Subject: Re: Effect of Pension Plan on RRSP contribution limits
Message-ID: <1988Mar7.221035.14322@lsuc.uucp>
Date: 8 Mar 88 03:10:32 GMT
References: <5464@watdragon.waterloo.edu> <15565@onfcanim.UUCP> <118@edson.UUCP> <284@tmsoft.UUCP>
Reply-To: dave@lsuc.UUCP (David Sherman)
Distribution: can
Organization: Law Society of Upper Canada, Toronto
Lines: 24
Summary: different treatment for defined-benefit vs. money-purchase plans is coming

In article <284@tmsoft.UUCP> ead@tmsoft.UUCP (Elizabeth Doucette) writes:
>:If you are a member of a money purchase plan, the $7,500 limit applies, less
>:the contributions you make to the plan. Money purchase plans are definitely
>:poorer than deferred benefit plans (unless you expect 40 years of deflation).
>:This higher limit helps to compensate.
>
>My understanding of section 146(5)(a)(i) of the income tax act is that
>there is no distinction between different types of pension plans, with
>regard to RRSP contribution limits. 

Elizabeth is correct. Until 1986 there was a difference between
money-purchase and defined-benefit plans in that a member of a defined-
benefit RPP was limited to $3,500 per year of RPP (*not* RRSP)
contribution.  This limit was removed and they're treated the same now.
Under the new regime starting in a year or two, however, the RRSP
contribution room allowable for pension plans will be ($15,500 minus
RPP contributions) for a money-purchase plan (the $15,500 won't be
$15,500 until 1995 or so), and ($15,500 minus a-number-reached-through-
a-complex-formula) for defined-benefit plans.  The formula will
apporimxate the current value of the future benefits under the plan.

David Sherman
-- 
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